Repeal the Davis-Bacon Act

How prevailing wage laws benefit unions at the expense of taxpayers

For nearly 80 years, contractors working on federally funded construction projects have been forced to pay their workers artificially inflated wages that rip off American taxpayers while lining the pockets of organized labor. The culprit is the Davis-Bacon Act of 1931, which requires all workers on federal projects worth more than $2,000 to be paid the "prevailing wage," which typically means the local union wage.

Here's what happens. Unskilled construction workers possess one clear advantage over their skilled, unionized competitors: They're willing to work for less money. But Davis-Bacon destroys that advantage. After all, why would contractors working on a federal project hire any unskilled workers when the government forces them to pay all of their workers what amounts to a union wage? Contractors make the rational choice and get their money's worth by hiring skilled unionized labor even when the project calls for much less.

Davis-Bacon is a blatant piece of special-interest, pro-union legislation. It hasn't come cheap for taxpayers. According to research by Suffolk University economists, Davis-Bacon has raised the construction wages on federal projects 22 percent above the market rate.

James Sherk of the Heritage Foundation finds that repealing Davis-Bacon would save taxpayers $11.4 billion in 2010 alone. Simply suspending Davis-Bacon would allow government contractors to hire 160,000 new workers at no additional cost, according to Sherk.

To make matters worse, the Davis-Bacon Act has explicitly racist origins. It was introduced in response to the presence of Southern black construction workers on a Long Island, N.Y.. veterans hospital project. This "cheap" and "bootleg" labor was denounced by Rep. Robert L. Bacon, New York Republican, who introduced the legislation. American Federation of Labor (AFL) president William Green eagerly testified in support of the law before the U.S. Senate, claiming that "colored labor is being brought in to demoralize wage rates."

Emil Preiss, business manager of the New York branch of the International Brotherhood of Electrical Workers (a powerful AFL affiliate that banned black workers from its ranks) told the House of Representatives that Algernon Blair's crew of black workers were "an undesirable element of people." The bill's co-sponsor, Republican Sen. James Davis of Pennsylvania, was an outspoken racist who had argued in 1925 that Congress must restrict immigration in order "to dry up the sources of hereditary poisoning."

The result was that black workers, who were largely unskilled and therefore counted on being able to compete by working for lower wages, essentially were banned from the upcoming New Deal construction spree. Davis-Bacon nullified their competitive advantage just when they needed it most.

More recently, the Obama administration extended Davis-Bacon via the American Recovery and Reinvestment of Act of 2009, also known as the stimulus bill. According to an All-Agency Memorandum issued by the Department of Labor, Davis-Bacon now applies to all "projects funded directly by or assisted in whole or in part by and through the Federal Government."

In other words, even projects that are only partially funded by the stimulus must obey the costly pro-union requirements of Davis-Bacon. With the economy floundering and the government apparently set on another New Deal-style construction spree, the last thing taxpayers needed were rules that force stimulus projects to cost even more.

In sum, we have a law that drives up the costs of federal projects, hurts unskilled workers, unfairly advantages organized labor, and has explicitly racist roots. It's time for Davis-Bacon to go.

Damon W. Root is an associate editor at Reason magazine. This article originally appeared in The Washington Times.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • ||

    HAHAHAHAHAHAHAHA

    If you think the Dems would ever get rid of this for any reason, you are utterly insane and/or delusional.

  • ||

    Not even if its repeal would make all peoples of the world brothers, end all war, lead to decades of triple digit growth.

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  • sage||

    Caption Contest!

    "Hey pal, what's with the white hat? Is your hat a racist or something?"

  • ||

    Ah, well, nice to tilt at windmills every so often. The article's correct, of course, but the trend has been to extend Davis-Bacon in new directions (say, in the weatherizing program in the stimulus bill), since the election.

  • André||

    Even Republicans would never dream of axing this. You make an entirely rational and coherent argument why it's bad, but it's never going to die.

  • ||

    Senator McCain voted against Davis-Bacon, but, really, would any libertarian actually change his or her vote to McCain on the basis of this issue? No.

    And so long as no one would actually change their vote in favor of someone for opposing Davis-Bacon (but plenty of labor guys would do the reverse), you had better believe that this is sticking around.

  • ||

    If I recall correctly, the repeal of Davis-Bacon was a line item in the 1994 Contract for America. As a construction accountant, and EEO (ExOrder11246) D-B compliance officer, I couldn't agree more with the repeal sentiment. D-B (and partner The Copeland Act) pushes up admin costs, and guarentees that the taxpayer pays the highest possible dollar for any public works projects.

  • G Mc||

    Completely agree; this is but one example of the myriads of cost saving measures Congress will be forced to consider in coming years.

  • ||

    Sounds to me like they are going to have to do something!

    Lou
    www.privacy-online.eu.tc

  • Chad||

    I just wanted to chime in and say that I whole-heartedly agree with this article. Down with the unions!

  • Chris||

    Repeal the bill. Let the market work as it should.

  • ed||

    Just don't say "Kill the Bill." That's a hate crime now.

  • Ben||

    Well if they would repeal that, then they should repeal the National Labor Relations Act while their at it.

    Not only would it do wonders for the economy, but it would be like one big simultaneous prison rape of every fat cat union thug in the country.

  • ||

    Hey, there was a guy who ran for President who repeated voted to waive Davis-Bacon according to the AFL-CIO. Not that they would make any libertarians vote for McCain. Just another article about things like agricultural supports and free trade that libertarians care about, but not enough to actually vote on the basis of.

    McCain Opposed Applying Davis-Bacon to Federal Disaster Areas. McCain supported an amendment to prohibit application of Davis-Bacon requirements for fair wages in declared federal disaster areas. It would have undercut the wages of people working in the harshest conditions. [S. 1650, Vote #320, 10/7/99]

    McCain Voted Against "Sense of the Senate" Support for Davis-Bacon. McCain voted to table a “sense of the Senate” measure saying the Davis-Bacon Act, which protects workers’ paychecks on public construction projects, should not be repealed. [S. Amdt. 4031, Vote #134, 5/22/96]

    McCain Has Repeatedly Supported Exceptions to Prevailing Wage Rules. McCain voted against tabling a proposal to require Davis-Bacon Act wage requirements for contractors on federal drinking water projects. He voted to waive the requirements for workers at Davis-Bacon federal construction projects. McCain voted against tabling a proposal to allow building contractors to pay workers less than the Davis-Bacon Act’s prevailing wage rules. [S. 2019, Vote #118, 5/18/94; H.R. 5132, Vote #105, 5/21/92; H.R. 2916, Vote #181, 9/19/89]

    McCain Voted Against 2004 and 2005 Highway Bills. McCain voted against the 2004 $318 billion highway and transportation bill that would create about 5 million jobs over six years in new highway and transit construction projects, although Bush said he would only approve up to $256 billion in funding. The legislation contained Davis–Bacon prevailing wage protections. McCain also voted in 2005 against a six-year, $286 billion reauthorization of the federal highway and transit construction program. The infrastructure modernization bill would create 1 million family-supporting jobs, protected by Davis-Bacon prevailing wage standards. [S. 1072, Vote #14, 2/12/04; H.R. 3, Vote #220, 7/29/05]
  • Drax the Destroyer||

    You are trotting out John "We'll be in Iraq for 100 years" McCain like he is a prized pig or something. So what if he accidentally voted in line with Libertarians on a few marginal issues? His stance on world-wide "Defense", trumps anything positive he tried to do domestically. Most of us can smell a shit-sandwich even if somebody stuck some Dove chocolate between then slices.

  • Ring||

    Yes, because we are all so much better under Obama, it was all worth it to repudiate Bush and Republicans.

  • ||

    I recall Thomas Sowell makes the observation that unemployment among black males was actually lower than among white males before the Bacon-Davis Act, which is the last time that was true ever since.

  • Roger McKinley||

    What's your point?

  • ||

    I don't have a point, I have a headache.

  • Roger McKinley||

    "...wages that rip off American taxpayers while lining the pockets of organized labor."
    Organized laborers are American taxpayers, and no one's getting "ripped-off" by paying 15% more for skilled laborers, especially considering how low their pay is to start with. I for one would rather have my bridges built by people who know what they're doing.

  • MJ||

    If no one is allowed to compete below the union price, there is no reason to believe that the union labor is better skilled than others.

  • ||

    No more bad-mouthin' the unions.

    Say something like that one more time, and you're going to wake up with a horse's head in your bed.

    Don Vito

  • ||

    consider this: many journeymen in my husband's union will take work doing "firewatch" (watching a welder to make sure any sparks/slag that falls doesn't lead to conflagration). Journeymen take-home hourly rate is $44/hr.

    you tell me: WTF kind of skill does it take to stand next to a ladder, look up, and be sure no sparks are catching anything on fire?

    My husband loves his trade and he is good at it, and he gets called back to work more often than some other guys simply because he's so good. Guys who are supposedly "skilled" taking firewatch or gang-box guard jobs make him sick. Drives up the cost of business and keeps contractors overall hiring fewer guys.

    Fucking $44/hr to look for sparks. Absurd.

  • Bart Stupak||

    I'm gonna need that phone number...

  • ||

    The "Anti Competition Act" aka "Davis Bacon" does not actually line the pockets of unions per se, but it sure was a political payoff to them. What it provides for is a "minimum prevailing" wage that is the average of union and non-union wages per craft (as reported annually by employers who choose to respond with requested data) in a given political subdivision or area, typically a county. So, the goal aimed at was this; because non-union could easily under bid union competitors, it gave non-union a huge advantage. This Act ostensibly leveled the playing field, and guarnteed that the taxpayers paid the highest possible dollar regardless of whether union or non.

  • ||

    Roger, I repond to your "rather have my bridges built by people who know what they're doing" with this fact. All state DOT departments have state engineers who OVERSEE EVERY ELEMENT OF ROAD AND BRIDGE CONSTRUCTION, and they even require ALL MATERIALS PLACED (even temporary traffic signs) have Material Certifications from the manufacturers for DOT or ATSSA compliance. Even the line painting crew must certify how much paint is used in EACH LINE AND SKIP (a "skip" is a broken white or yellow line) This process takes place regardless of union or non-union status.

  • NS||

    "Contractors make the rational choice and get their money's worth by hiring skilled unionized labor even when the project calls for much less."

    This statement only makes sense if the contractors in question are hiring new hands. In my experience, I have never seen a contractor hire new people because they are starting a government project. And, unless the project is huge, they are not likely going to take on someone who is over-qualified; After the job is finished, they will still have to pay this person.

    No. Most contractors are happy to continue business as usual, regardless. Sure, they would benefit more if their profit margin is higher, but it is still profit. Contractors bid on government jobs because it still pays. Period.

  • Liberty or Death||

    You have really have no idea about what you are talking about. Contractors expand and contract their hourly workforce on a regular basis based on the work they have.

    Of course contractors will continue to bid and perform government work - Davis Bacon does not affect them that much directly (other than the paperwork required to keep records). It does, however, directly impact their cost to do work. Costs go up and therefore their bids and contract amounts are artificially inflated on Davis-Bacon projects. This is not supposition, it is a fact. Their profit goes up only because the cost of the work goes up. Davis-Bacon increases costs, not profits. Who pays for this artificial increase? We the People. Period.

  • ||

    Liberty or Death, well put. I would however add that profit on public work is very low because it Does inflate cost, but bidding, especailly right now is so fierce, contractors are cutting bids to the bones. Some contractors are even "buying" the work at no profit just for cash flow. You can also add the interest cost from the delays in payments. Putting together a compliant public works billing is a detailed and difficult task, and if all the subcontractors are not also in compliance, the GC will be punished with non-payment. It is a Very difficult game to be in.

  • Reno||

    Contractors regularly hire new workers when a contract is awarded to them. Consider a small business that recieved a multi million dollar contract. Now the program that they supported has lagged on contractual coverage so the Contractor has asked their Congressman to ask us if it can be sped up because they are having to lay off workers because this Government contract they were depending on has not come through. The reason that it can't be sped up is that when Congress attempts to fix a problem with Federal Procurement they make the process longer by having more pointless reviews (reviews where it sits for a couple of weeks before someone pencil whips it through) and fixing process by implementing a checklist. Remove that and we could move.

  • Jennifer||

    I work for a H/H contractor in VA. The D-B rates are less than what we pay regularly. VA is a right to work state so the DB rates are low (prevailing wage--no union wages to look at).
    When I get a new project with DB wages I know that I am going to have more paperwork, but that's it. The DB rates are EXTREMELY high in DC just 15 miles up the road. There, we have to make concessions with our rates. We usually put our regular employees up to that rate and then take them back down to where they were after the project is complete. As long as we explain it to them they are okay with it.

  • Libertarian||

    Freedom is outsourcing all work to Asia! The fewer people with all the wealth, the freer we are! Freedom!

  • ||

    Freedom is outsourcing all work to Asia! The fewer people with all the wealth, the freer we are!

    I must conclude that you don't think that Asians are people, since you oppose having the poorest people in the world get jobs and wealthier. Consistent, really, with Davis-Bacon, since that was originally passed to keep black people from taking "white jobs."

  • ||

    Because protective tariffs, ever growing reams of regulation, corporate taxation, and government perpetually coercing companies to unionize and abide union demands doesn't cause them to outsource or relocate overseas..

    Oh wait, that's exactly what all those things do.. hmm.

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  • Paul Lazaga||

    I completely agree that "prevailing wage" laws are an heavy expense to the taxpayer and federal, state, and local budgets. I don't agree with the implication that non-union labor is unskilled. Many workers in non-union companies are highly skilled and in many cases have skill levels higher than union members. Locally the hourly rate difference between competitive wage and "prevailing wage" is closer to 50%"

  • Liberty or Death||

    This is exactly right and an important clarification to the article.

  • ||

    Non-union workers are scabs, and should be re-educated. And any politician who votes to repeal Davis-Bacon is likely to end up under Giants Stadium in Jersey.

    Don Vito

  • ||

    Good luck with that.

    Unfortunately, the politically entrenched seem to be going the other way.

  • Parker||

    We need to change the name - Bacon just naturally sounds like a GOOD thing...

  • Sean||

    Mavis Beacon's too busy typing to go anywhere.

    Entitlement states don't get smaller, they just get bigger until they implode upon themselves.

    Look at Michigan, specifically Detroit. The unions preferred to destroy the city and reduce it to rubble rather than give an inch.

    They and the other "whatever I want is a right" folks will do the same with our nation as a whole. Best we can hope for now is to rebuild it a bit better next time.

  • ||

    What the hell is pingback and why do we need it?

  • ||

    What's the problem?

    The prevailing wage for a plumber in the Bronx (N.Y) is $51.36/hr + 30.74/hr. in benefits.

    Thats about $ 170k/yr (without overtime). What...you don't make that much....who has the shit job now?

  • Joe||

    Agree wholeheartedly that D-B needs to be thrown out, but as a contractor would like to point out that even with D-B it's still cheaper to use non-union labor, because the attitude of union labor tends towards normally non-union contractors is usually hostile which results in intentional work slow downs which drive up the costs and make them uncompetitive with union shops. And, frankly, having worked both union and non-union labor, I've never noticed any real difference in skill levels.

  • WhollyFreeMarket,Batman||

    What, if anything, has the Supreme Court decided on this issue?

  • WhollyFreeMarket,Batman||

    http://www.cato.org/pubs/briefs/bp-017.html

    No legal challenge to Davis-Bacon itself has ever been brought. Yet under current Supreme Court precedent, and a fair reading of the Constitution, the law is clearly unconstitutional as having both discriminatory intent and lingering discriminatory effects. As the Supreme Court noted in 1985 in an analogous situation involving a facially neutral but discriminatory provision of the Alabama Constitution, "without deciding whether [the provision] could be enacted today without any impermissible motivation, we simply observe that its original enactment was motivated by a desire to discriminate against blacks on account of race and the section continues to have that effect. As such, it violates equal protection [and is therefore unconstitutionall]."[68]

    So, why has this not occurred?

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  • Ratko||

    Yes they do, however, the Davis-Bacon Act was sponsered by the two Republicans it was named for and signed into law by Herbert Hoover, also a Republican.

    Curiously only Republican presidents have opposed it since it became law.

  • Ratko||

    Here's what happens. Unskilled construction workers possess one clear advantage over their skilled, unionized competitors: They're willing to work for less money. But Davis-Bacon destroys that advantage. After all, why would contractors working on a federal project hire any unskilled workers when the government forces them to pay all of their workers what amounts to a union wage?

    You lost me on this one. As someone who has profitted from it, I agree Davis-Bacon should be repealed. But how is it you connect union to skilled. The majority of my contracts that invovled Bacon-Davis wage scales came about for the very reason the unions couldnt supply the skill needed to do the work on the very jobs they dominated.

    Union hardly equals skilled, in many cases it means poorly skilled and overpaid.

    "Good enough for government work."

  • Get AliFE||

    Does no one remember why we created unions in the first place? Given the greed that is ripping our country apart -- without the union wage, even the highly skilled would be barely above a minimum living wage. Unions exist as part of the balancing act that keeps a middle class in America.

  • blah blah blah||

    this article is way over opinionated. How do they know that the Act has created all the effects...its all a bunch of assumptions...and all of you are making assumptions. I have an idea...whenever you hear alarming new with a whole bunch of opinions...why don't you read the legislation for yourself, do a little bit of research, get some actual facts from sources who is someone other than some guy from some foundation and then form an opinion! News is shit

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  • abercrombie fitch uk||

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    Even if you go on his website, it's still just a a ten minute discussion. The interview with Jim Cramer simply amounted to Jim sputtering something every couple of minutes while John wagged his finger at him the whole time. I've never seen him have an intelligent discussion with anybody, and he only talks to people that he knows he can bully into a corner. Usually idiots, yes, but it's still dispicable. I don't watch him that often, but it is people like him that make me wretch. The fact that people go around saying "He slammed so and so" in that "debate" pisses me off. John's not directly responsible for that, but he certainly plays his audience to get that effect.

  • master||

  • Rob Thomas||

    One problem with your argument. You assume that anyone that is "NON-UNION" is UNSKILLED. What makes the union workers more skilled? I am, and know more SKILLED non-union workers than skilled UNION workers.

  • Bill||

    Why would I want to work in or conduct business in a Federal Building built by unskilled labor. I would assume that this would also require unskilled building inspectors to approve project. Ever heard "You get what you pay for." It doesn't matter what race they are or where they come from, I would not appreciate anyone pulling up in front of my place of employment in a bus offering my employer unskilled workers to replace me a a significantly lower hourly rate.

  • ||

    Your article made me wonder what republican party you belong to. Obviously you are not a worker, unskilled or otherwise! If you were you would thank God for the jobs you would have under the Davis Bacon law!This is one law that helps the working man and you are against it. Be carefull; you're showing your true Colors!

  • buzz||

    I am a commerical roofing contractor. Saying union labor is more skilled is an absolute joke. Here is the pevailing wage for a recent state roofing project. $50.00 per hours plus benefits of $13.00 per hour for a roofing laborer. You could throw a rock out a window and hit a "roofing laborer". $63.00 per hour for an unskilled laborer. What a joke

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